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By Lisa ShuchmanPublished: Apr 28, 2014

The GC's POV on IP

Photo: Roy Rochlin

General counsel from five major companies said Friday they broadly support patent reform proposals currently before Congress and expect a patent reform bill to pass. But they expressed doubts and concerns about efforts to reform U.S. copyright law.

Michael Fricklas of Viacom Inc., Kimberley Harris of NBCUniversal Media, David Hyman of Netflix, Mark Seeley of Elsevier and Brad Smith of Microsoft Corp. comprised a panel of GCs at Fordham University’s 22nd annual Intellectual Property Law Conference, a gathering of IP attorneys from around the world that the director general of the U.N.’s World Intellectual Property Organization dubbed “the Davos of IP law.”

While many in the patent community have been outspoken in their opposition to further patent reform, saying the America Invents Act included enough reform of the system and needs to be given time, the panel of general counsel agreed that patent litigation and abuse had reached a point where there is a need for change.

“The most important thing is that we restore some economic rationality to patent litigation,” said Brad Smith, who appeared “virtually” via a prototype computer invented by Microsoft that made it seem as if he were sitting with the other panelists.

Nonpracticing entities, which acquire patents for the sole purpose of asserting them to get licensing fees, have had too many successes and will not stop without some further controls, Smith said. “Patent reform may create some equilibrium in the system,” he said.

Netflix’s Hyman noted that NPEs, often referred to disparagingly as “patent trolls,” have filed many lawsuits against Netflix over the past few years. “Patent reform is a good step forward,” he said, “but I don’t think it will solve everything.”

Smith said it is worth noting that the current Congress, which has had trouble passing any laws, may well pass patent reform legislation if the Senate reaches an agreement in the next few weeks. (The House of Representatives has already passed a patent reform bill.) It shows, he said, just how exceptional the problem has become. “But it also shows that it’s easier to pass something if most people don’t understand it,” he quipped.

For Viacom’s Fricklas, NBCUniversal’s Harris and Elsevier’s Seeley, a broad discussion of copyright reform emanating from Washington, D.C., is creating more concern than patent reform. “As soon as you start talking about copyright reform, you’re opening up a Pandora’s box,” said Harris. “So I just hope Congress’ long-running dysfunction continues.”

Prompted by panel moderator, conference organizer and Fordham Law professor Hugh Hansen, the lawyers weighed in on such topics as IP risk, litigation and globalization.

The five general counsel commented that they all work for global—not U.S.—companies, which makes it important to stay on top of IP laws all over the world and maintain a global perspective.

Fricklas noted that calculated risk is built into the business model of typical industry disrupters in IP. They take the risk to get market share, hoping that by the time they get to court, they will have earned support from consumers. “They’re counting on judges being reluctant to reverse things that have consumer acceptance,” he said.

At the same time, Hyman said in-house lawyers are often too reluctant to take risks. Lawyers, he said, should be willing to fail. “If you’re not being sued every once in a while, you’re being too risk-averse,” he said.